Renasant assumes assets of FDIC-closed bank

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Published: February 6,2011

Tags: acquisitions and mergers, banking and finance

TUPELO — Regulators last Friday shut down three small banks in Georgia and Illinois, bringing to 14 the number of bank failures in 2011 following last year’s tally of 157 amid the sagging economy and mounting bad loans.

The Federal Deposit Insurance Corp. seized American Trust Bank, based in Roswell, Ga., with $238.2 million in assets and $222.2 million in deposits; North Georgia Bank of Watkinsville, Ga., with $153.2 million in assets and $139.7 million in deposits; and Chicago-based Community First Bank, with $51.1 million in assets and $49.5 million in deposits.

Renasant Bank, based in Tupelo, Miss., agreed to assume $147.4 million of the assets and all the deposits of American Trust Bank. BankSouth, based in Greensboro, Ga., is assuming $123.9 million of the assets and all the deposits of North Georgia Bank. Northbrook Bank and Trust Co., based in Northbrook, Ill., is acquiring the assets and deposits of Community First Bank.

In addition, the FDIC and Renasant Bank agreed to share losses on $94.3 million of American Trust Bank’s loans and other assets. The FDIC and BankSouth are sharing losses on $120.1 million of North Georgia Bank’s assets. The agency and Northbrook Bank and Trust are sharing losses on $42.8 million of Community First Bank’s assets.

The failure of American Trust Bank is expected to cost the deposit insurance fund $71.5 million. The failure of North Georgia Bank is expected to cost $35.2 million; that of Northbrook Bank and Trust, $11.7 million.

The two Georgia banks brought the number of failures in that state this year to four. Georgia has been one of the hardest-hit states for bank failures amid an avalanche of bad loans — especially for commercial real estate. Twenty-one banks were shuttered in the state last year. Other states that have seen large numbers of bank failures are Florida, California and Illinois.

The 157 bank closures nationwide last year topped the 140 shuttered in 2009. It was the most in a year since the savings-and-loan crisis two decades ago.

The FDIC has said that 2010 likely would be the peak for bank failures. Already this year the pace of closures has slowed: By this time last year, regulators had closed 16 banks.

The 2009 failures cost the insurance fund about $36 billion. The failures last year cost around $21 billion, a lower price tag because the banks that failed in 2010 were on average smaller. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three succumbed in 2007.

The growing number of bank failures has sapped billions of dollars out of the deposit insurance fund. It fell into the red in 2009, and its deficit stood at $8 billion as of Sept. 30.

The number of banks on the FDIC’s confidential “problem” list rose to 860 in the third quarter of last year from 829 three months earlier. The 860 troubled banks is the highest number since 1993, during the savings-and-loan crisis.

The FDIC expects the cost of resolving failed banks to total around $52 billion from 2010 through 2014.

Depositors’ money — insured up to $250,000 per account — is not at risk, with the FDIC backed by the government. That insurance cap was made permanent in the financial overhaul law enacted in July.

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